Market Overview: DAX 40 Futures
DAX futures moved lower last week with a successful Low 1 at moving average last week, now with 2 consecutive bear bars with tails below. We are always in short. Bulls are looking to scale in for a double bottom at the March low for a long-term trend resumption up. The bears are scalping so we might be sideways to down in a trading range next week.
DAX 40 Futures
The Weekly DAX chart
- The DAX 40 Weekly chart has consecutive bear bars with tails below and we closed within the prior weeks range, so it is not as bearish as it could be.
- We rejected the 20-week and 100-week MA and we are still always in short. We are still on the Low 1 MA sell from 2 weeks ago with a target to the 200-week MA below.
- For the bulls it’s a deep pullback from the sell climax reversal and longer-term trend resumption. But the maths isn’t good, so they will likely scale in until they can find a double bottom near the 200-week moving average.
- For the bears we are in a weaker bear channel, but it rejected the trend line so likely hoping for a second leg sideways to down.
- The bulls want a High 1 buy scalp up to the moving average, possible double bottom and trend resumption. But with the MA above they know bears will likely sell there and above it.
- Bears want the bulls to give up and get a sell climax down to the March lows.
- The maths is slightly better for the bears currently, 2 bear bars in a row but tails above and below so we are in a trading range on a lower timeframe.
- If we stay in a tight trading range we can expect something to be wrong with the bars. The bulls might get the High 1 but a failed close above. The bears might trade lower but with more tails.
The Daily DAX chart
- The DAX traded sideways to down last week and last week was the 3rd week we had consecutive bear bars.
- The bears see the moving average gap sell and now a 12-day bear channel. They have watched the bulls get a failed high 1 buy and a failed high 2 buy.
- So there are no buyers above bars, but why are the bears selling below scalping out? If traders think we are in a trading range they will trade it like so.
- We are below the moving average, we’ve had three sets of consecutive bear bars so we are probably always in short.
- But bad follow-through and big bars mean big risk, for both bulls and bears. It’s limit order trading and low-probability swings. The daily ranges are tighter than that pair of jeans you never wear.
- For the bulls it’s a bull flag, a deeper pullback from reversal up from the March 7th lows. It’s three pushes up and a wedge reversal so they expect two legs sideways to down before resuming. Will it turn into an endless pullback?
- For the bears, they want to get a second leg down to the March lows and we might have started already. They saw the wedge and a possible head and shoulders last week which played out, but might wait to sell higher with a Low 2 closer to the moving average.
- Markets have a way of making traders always chase it. If the bulls get a High 2 or High 3, or consecutive bull bars here, the spike and channel is still reasonable to get a move back up to at least the March 29th high. But you need a wide stop to scale in. We might get bears closing early and looking to sell up higher for a higher probability double top.
- The bears see the March 29th as a lower low, confirmation of the bear breakout and retest of the range to move lower for a measured move is back down at March 7th. A good pair of consecutive bear bars next week should get some kind of sell climax down there.
- With such tight trading, if you’re a beginner, regardless of whether you’re long or short, I think you should be at the beach!
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